Analysis from Kiwi Bank in New Zealand on the CPI data published earlier today:
- The December quarter inflation report was slightly above market expectations, but below RBNZ expectations. The inflation rate held at 7.2%. And price pressures remain intense, for now.
- There were some upside surprises in the basket, particularly airfares. The return of international tourists have enabled some chunky price hikes, with accommodation services up 14%yoy.
- We are seeing the peak in inflation now. And the outlook for inflation, both offshore and onshore, is improving. The world war on inflation is being won.
- We now expect the RBNZ to deliver a 50bp hike in February, a step back from the outsized (catch up style) 75bp signalled. We have seen more than enough to justify a reduction in the pace and extent of future rate rises. Enough is enough. A move to 5.5% is likely to be a step too far. We expect a move to 5%. Rates markets should react.
ANZ argue along similar lines:
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The data ICYMI:
- New Zealand Q4 inflation 1.4% q/q (expected 1.3%) 7.2% y/y (expected 7.1%)
- NZ Q4 CPI higher than expected. Later today the RBNZ releases its own CPI data, stay tuned
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NZD/USD dribbling lower as the data digested:
